Electronics manufacturing services (EMS) will disappear and be replaced by design manufacturing services (DMS) as EMS providers such as Flextronics and Foxconn Electronics (Hon Hai Precision Industry) are starting to strengthen their R&D abilities by recruiting talent in Taiwan, according to Acer founder Stan Shih.
Meanwhile, with notebook ODMs are also strengthening their vertical integration with regards to upstream component supply to provide more complete and cheaper services to their clients. In the end the EMS providers and ODMs will all end up becoming DMS providers, Shih noted.
Therefore, Shih believes Taiwan notebook ODMs will face direct competition from these providers in the future.
Shih also pointed out that in addition to strengthening R&D capabilities, ODMs and EMS providers will also need to work on their contact with consumers. He cited the example of Intel using the Intel Inside mark through its clients' products to gain market recognition from consumers.
Stan Shih, Acer founder
Photo: Terry Ku, Digitimes, July 2009
Article translated by Joseph Tsai
